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Could the world’s idle computers make the $200 billion cloud computing industry obsolete?

In the final years of the Obama administration, it seemed that the world was witnessing the emergence of an odd alliance between the largest establishment tech companies and the traditionally anti-establishment community of independent techies. The highest-profile case involved Apple and other major corporations siding with civil rights organizations to advocate against weakening device encryption on behalf of law enforcement, and it led to a hope that these companies were finally seeing the profit potential in having secure, satisfied customers. That hope has now evaporated in the face of continuous betrayals of user trust, and rather than take it lying down, tech users are looking into alternative solutions that put them in control.

The recently passed federal Clarifying Lawful Overseas Use of Data Act, or the CLOUD Act, makes it perfectly clear why this shift away from self-interested stakeholders is so necessary. The new law was motivated by a legal demand for Microsoft to hand user data to US law enforcement, even though that data was stored outside US borders and, thus, in a different legal jurisdiction. At first, it seemed that Microsoft was planning to stand up for privacy and national sovereignty by opposing the demand in court—but, predictably, the corporation rolled over just as soon as it deemed that its own interests were protected.

The goal of the CLOUD Act is for the US to be able to compel any company that does business in the country to provide information to US law enforcement, even if that information is not actually stored within the US. If it’s successful, a company’s willingness to fight will become essentially irrelevant. It makes all cloud computing and cloud storage companies suspect, simply by virtue of being cloud computing companies.

Groups like the Electronic Frontier Foundation and the American Civil Liberties Union believe it also could allow US law enforcement to seize information in foreign jurisdictions because those regions have more lenient privacy laws than the US itself. The reverse, in which foreign law enforcement agencies operating under more stringent rules than the US, could gain access to protected information stored in the country, is also a major concern.

These fears are compounded by a basic lack of trust in American-based tech companies that theoretically act as advocates on behalf of their customers—many of which have abysmal records of actually following through. The concern isn’t just that cloud usage data could be given up involuntarily to an outside party, but that such data could be intentionally and proactively packaged and sold to an outside party. Even professed mistakes can have shocking implications for personal boundaries and the expectation that modern life comes with any privacy at all.

With traditional network technology, there was no way to cut these large service companies out while still remaining as agile and profitable as the competition, or while maintaining the features that modern users demand. Today, however, advanced and emerging ideas, like the blockchain technology behind Bitcoin, are chipping away at the built-in advantage held by moneyed corporations. They’re empowering startups and even individuals to automate the bottlenecks that previously made large third parties a necessity for all cloud services. Modern blockchain-focused startups are developing services that make it possible for individuals to administer the crucial aspects of cloud computing securely, without involving a third-party service provider that weakens security and charges an extra fee.

Subutai, a blockchain-based cloud computing service, allows users to buy and sell computing time to create the exact amount of computing power they need for a given job, without having to invest in all that power as hardware. Users can sell their idle computing time over the service in exchange for blockchain-validated digital tokens, which can be redeemed to purchase time on other idle computers hooked up to the service. Beyond creating ad-hoc cloud computing networks without the need for a corporate overseer, this model also essentially makes computing downtime useful by allowing it to subsidize the extra power needed for later, tougher projects.

Another blockchain-based startup, called AXEL, is similarly trying to wrest a portion of the cloud from large stakeholders—this time, cloud storage. By letting users set up their own remote storage devices, rather than paying an exorbitant monthly fee for access to a terabyte of storage space, AXEL users simply can buy a cheap terabyte drive, plug it in to their desktop at home and link it to their AXEL account—at that point, they have an entirely private connection to that HDD that allows full cloud access without even the possibility of outside interference or surveillance by the service provider. And if you want another five terabytes of cloud storage? It’s as easy as buying five more terabytes of storage and hooking them up to the network. Since you own the drives, moving a file onto a linked drive takes zero upload time—it’s in your cloud-linked folders, after all, and thus has nowhere else it needs to go.

That sort of versatility, where freezing out large corporations doesn’t just preserve features but actually expands them, is why the blockchain has such potential to upend the cloud space. Large cloud services corporations, from Amazon to Google to Microsoft, have reached their current level of dominance not by satisfying their customers but by correctly pointing out that they were the only game in town—but now, the users can start to provide an alternate solution all their own.

It remains to be seen whether these companies will notice the impending danger to their business model in time to act—or, more to the point, whether there is any action they could take that would make them desirable in the face of growing privacy issues and ever-more-user friendly competition.

Corporate cloud service providers are facing an existential crisis and given their increasingly aggressive practices and pricing, it seems as though they don’t even know it. New challengers in tech are proving more than happy to show them.

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Image courtesy of Carty Sewill, http://cartyisme.com/

After its decision to stop accepting bitcoin for some transactions last week, Microsoft has reversed the decision, stating that it had ensured lower amounts of bitcoin are usable. This is apparently due to some sort of agreement between Microsoft and BitPay. Though the nature of the agreement is unknown.  The reason for the original decision was the high volatility and transaction fees on the bitcoin network. So one could infer that whatever the agreement is, it solves those issues somehow.

Microsoft’s decision good news for Steam?

In an earlier blog post, BitPay stated that Microsoft was using it to manage its bitcoin transactions. Bitpay is the same provider that Valve’s Steam used before it ceased its bitcoin transactions last year. Does this mean that Steam will be able to reach a similar agreement with BitPay and reinstate its own bitcoin-based transactions? Is the agreement not available to other BitPay customers? If it is the latter, what exactly is the agreement? Is it that Microsoft’s transactions are worth enough to BitPay that it is willing to lower its profit margin?

Fallout from the rapid-fire stance changes

The bitcoin community seems rather unsure of its opinion of Microsoft over its quick changes in stance towards bitcoin. With some users stating that this move was a power play and others thankful for the decision’s reversal.

Featured image from Wikipedia

Microsoft has temporarily removed the ability to directly buy products from its store with bitcoin. However, the ability to credit an account with bitcoin is still active (for some, though it could be a sign of the rollout of removing Bitcoin payment options). The decision is reportedly due to the extremely large fluctuations bitcoin has experienced recently and the ever-increasing transaction costs. It is unclear whether or not this is an indication that Microsoft intends to suspend all bitcoin transactions in the future. Notably, by accepting Bitcoin for deposits, they don’t have to deal with the volatility in the Bitcoin price. If users feel the fees are too high, they just won’t top up their accounts with BTC during that time. Back in 2016, a similar scare occurred where Microsoft temporarily removed Bitcoin as a payment option. They denied doing so after – no such denial has been forthcoming this time.

Bitcoin dropped from $20, 000 to $14,000 in a matter of days. Image from coinmarketcap

Microsoft is not the first company to suspend bitcoin-based purchases

Steam took similar actions in December last year by removing the ability to purchase games with bitcoin, stating it was due to “High fees and volatility” referencing a 25% drop in price over a few days, and fees jumping from $0.20 to $20 a transaction.  Though it is unclear whether or not the high fee motivation included the large fee bitpay included on transactions.

Potential Solutions

There are a few solutions to this; Such as selecting a different currency to transact with, such as Bitcoin Cash or Ripple. As services such as shapeshift.io and changelly exist, this should not inconvenience those holding bitcoin or other altcoins, as the services allow for instant conversion from one coin to another (at a higher fee than some exchanges, unfortunately). Another possible solution is to continue to accept bitcoin no matter the fee and to convert it to fiat as quickly as possible to avoid too much network fluctuation. Though this does not protect customers from high transaction fees.

Featured image from Wikipedia